The $META Investment Thesis: The Markets are Wrong

In this episode, we explor Meta's stock performance amid competition from Google and OpenAI. We discuss challenges with products like the Vibes app and evaluate the behemoth's long-term potential.

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TIMESTAMPS

0:00 Meta's AI Spending Frenzy
1:01 The Bull and Bear Case for Meta Stock
4:00 Hiring Insights and Market Reactions
4:38 Evaluating Meta's Spending Strategy
9:28 The Dilemma of Meta's Product Launches
10:50 Unpacking the Ray-Ban Meta Displays
13:19 Meta's Hardware Challenges
18:05 Meta's Data Center Ambitions
20:01 The State of Meta's AI Apps
23:20 Meta Vibes: A Missed Opportunity
25:16 The Future of Meta’s AI Models
30:40 The Bull Case for Meta's Future
35:41 Final Thoughts on Meta Stock
38:36 Special Offer for Our Listeners

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RESOURCES

Josh: https://x.com/Josh_Kale
Ejaaz: https://x.com/cryptopunk7213

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Not financial or tax advice. See our investment disclosures here:
https://www.bankless.com/disclosures⁠

Creators and Guests

Host

Ejaaz Ahamadeen

Host

Josh Kale

What is In the Loop AI?

Exploring the frontiers of Technology and AI

Ejaaz:
Do you guys remember when Mark Zuckerberg spent $300 million to hire a single AI researcher?

Ejaaz:
Well, this week he spent 10.5 times that amount, $3.5 billion to hire one person from his competitor.

Ejaaz:
At this point, I think it's evident that Meta is relentless with the amount

Ejaaz:
of money that they're spending to win the AI race.

Ejaaz:
They've given away tens of billions of dollars in AI models for free to try

Ejaaz:
and undermine their competitors, which failed.

Ejaaz:
And they've already committed to spending $600 billion over the next five years

Ejaaz:
here in the US to build our data centers to train frontier AI models.

Ejaaz:
But one question remains unanswered, Josh.

Ejaaz:
Is Metastock a buy or is it a sell?

Ejaaz:
And I ask that question because it's pretty clear that competitors like Google

Ejaaz:
and Open AI are eating their lunch.

Ejaaz:
They're beating them in apps. They're beating them in models.

Ejaaz:
They're beating them in data centers.

Ejaaz:
So in this episode, Josh and I are going to cover the bull case and the bear

Ejaaz:
case to investing in Meta stock.

Ejaaz:
Make sure you stay until the end because we have a special surprise for you

Ejaaz:
from our friends at OpenAI.

Ejaaz:
Josh, I want to show you a chart.

Ejaaz:
I want to show you the Meta stock chart. Over the last month,

Ejaaz:
it is down 5.6%, which

Ejaaz:
may not seem like much but that is billions of dollars um

Ejaaz:
whilst their competitors like google like nvidia

Ejaaz:
have been up only do you have any thoughts about why this is because i'm personally

Ejaaz:
confused right zucker spent i think 30 billion dollars now to hire like a killer

Ejaaz:
team to build out ai for the company they have released a bunch of models and

Ejaaz:
open source them and they're investing in data centers what like why is this happening

Josh:
Yeah, I think the market's trying to understand the new meta,

Josh:
because this is a very different company than what it previously was.

Josh:
Previously, it was a social media company, they sold ads, they made a ton of

Josh:
money, they had billions of users.

Josh:
Now they're pivoting to, I mean, first it was a pivot to the metaverse,

Josh:
where they started building the virtual reality goggles.

Josh:
Now it's more of a pivot into AI and fully putting the balance sheet on investing

Josh:
in these large infrastructure projects,

Josh:
investing three and a half billion dollars on a single developer.

Josh:
Their their capex is going through the roof when we're not

Josh:
really getting the results to see it so what i think we're seeing here

Josh:
in the meta price and you just if you move to the six month chart it's actually

Josh:
like fairly good i believe like they've been

Josh:
doing pretty well it's up well um people are trying to get a gauge for what

Josh:
they're doing right what they're doing wrong and how they could price this into

Josh:
the stock and i think this episode we could kind of walk through the different

Josh:
elements of meta's business and kind of talk about what we like what we don't

Josh:
like because the market very much feels wrong when it comes to evaluating some things,

Josh:
but it is kind of right when it comes to evaluating others.

Josh:
So I think we're going to just kind of diagnose why the market is wrong for

Josh:
specific things that we have like a pretty unique interest in covering.

Ejaaz:
Let's start with hiring, Josh, because like, sorry, I can't get this headline out of my head.

Ejaaz:
Let's give some context for the listeners here. This week,

Ejaaz:
Zuck is rumored to have spent three and a half billion dollars to hire this

Ejaaz:
guy called Andrew Tullock from a company called Thinking Machine Labs,

Ejaaz:
which coincidentally was founded by an OpenAI co-founder, Amir Amir Murati,

Ejaaz:
who left OpenAI and started his own Thinking Lab.

Ejaaz:
What's so interesting about this is Zuck already made this guy an offer about

Ejaaz:
two months ago for $1.5 billion, which he turned down.

Ejaaz:
But apparently everyone has their own price.

Ejaaz:
Why this is shocking to me, Josh, is

Ejaaz:
meta literally announced that they were not going to spend any more

Ejaaz:
money hiring people for their ai team and they've

Ejaaz:
gone ahead and kind of broken that rule and spent the most amount that

Ejaaz:
they they ever had um but number two and i have to be honest here i'm gonna

Ejaaz:
i'm gonna eat some humble pie i remember on an episode about two months ago

Ejaaz:
when zuck went on this spending spree i said hey we've got to give zuck some

Ejaaz:
time because it's going to take some time to build these ai models to build out some apps.

Ejaaz:
Now we're three months later and he still hasn't produced anything to kind of show for it.

Ejaaz:
So I'm kind of feeling like Zuck is misspending his money and he's not able

Ejaaz:
to execute on building out the grandeur AI vision that he promised us.

Ejaaz:
Where's the artificial general intelligence?

Josh:
Since they've started this huge hiring spree, the only thing we've really gotten

Josh:
is vibes, which was that like social media, TikTok scrolling based thing.

Josh:
Did it actually release you, Jess? Is it even out?

Ejaaz:
Because I haven't played with it if it is. No, well, I mean,

Ejaaz:
that says something about both of us. When was the last time you were on Facebook?

Josh:
I can't tell you. I'm not sure I even have Facebook still downloaded.

Josh:
It might be downloaded on my phone. I'm not logged in. But I do want to talk

Josh:
about the spending because there is the bull case and the bear case both to be made on spending.

Josh:
What we're seeing Zuck do is he's really going all in.

Josh:
And that level of conviction matters because the company needs to also be all in.

Josh:
And they're spending a remarkable amount of money in doing so.

Josh:
Uh the thing though is is three and a half billion dollars

Josh:
is a drop in the bucket if they do this right if they actually do create

Josh:
really high quality ai experiences for

Josh:
their many billions of users that generates a tremendous

Josh:
amount of revenue and metastock is very very clearly undervalued

Josh:
now if they're actually able to deliver on that because when you

Josh:
think about the costs associated with building up these giant data centers they

Josh:
are tens to hundreds of billions of dollars that they're

Josh:
going to be pouring into this and if one single ai

Josh:
researcher can create one single algorithmic unlock or

Josh:
make a small incremental improvement that lowers

Josh:
the amount of compute required by even 10 percent that covers his entire compensation

Josh:
and then some with many multiples to spare so the leverage of the decision making

Josh:
of these employees is astronomically high and if you can get one person that

Josh:
could save you even one percent on a hundred billion dollars that's a billion

Josh:
dollars it's a lot of money how.

Ejaaz:
Much time are you going to give zuck to do this josh because like is it months

Ejaaz:
is it a year like like how long am i holding my metastalk for

Josh:
You have to give them time to release something i

Josh:
know vibes was something but it was very much not it was just kind of like a

Josh:
nothing burger i'm not sure why they did that um it was kind of a waste it left

Josh:
bad very very bad like optics and a taste in my mouth because it's just like

Josh:
what are you doing with all this talent you're making more ai social media um

Josh:
applications but i want to give them an opportunity to actually release something substantial.

Josh:
Like release a big model, release some sort of large product.

Josh:
I would say wait until version one of whatever they're working on to come out

Josh:
before evaluating is my take.

Ejaaz:
My gut wants to basically say that I want to sell my Meta.

Ejaaz:
I hold Meta, but my brain is telling me

Ejaaz:
like it took years to build the first version of

Ejaaz:
chat gpt and it's like no secret that

Ejaaz:
zux joined this race kind of late and he's

Ejaaz:
trying to make up for that by spending the money to hire the talent but

Ejaaz:
the talent needs time to cook as you

Ejaaz:
say right so put quite clearly i'm gonna reserve my judgment until the next

Ejaaz:
ai model that meta releases is out whatever that is if it's llama 5 or behemoth

Ejaaz:
or whatever the hell they call it i'm gonna wait for that because the model

Ejaaz:
the chat gbt competitor will basically determine whether they're good enough or not yeah

Josh:
That's that's interesting okay so disclosures ejs does have meta stock i

Josh:
have none but i do i guess i have a bull case to make for them um

Josh:
which is that meta has a couple billion users which is

Josh:
a ton they also have a ton of data on those users in terms of preferences what

Josh:
they like what they don't like they also have a algorithmic engine to serve

Josh:
those users exactly the type of content that they want and that pairs very well

Josh:
with their advertising engine which is world class i mean And Instagram,

Josh:
at least, because Instagram uses the same engine,

Josh:
they're able to serve me ads that are better than basically any other ad that

Josh:
I get anywhere on the internet.

Josh:
So they have this really vertically integrated stack of users,

Josh:
technology to serve users, and technology to serve their preferences.

Josh:
Now, if they can apply an AI layer on top of that stack, where they can now

Josh:
coerce these, I don't even know how many billions of users they have,

Josh:
but many billions of users to further embed AI into their lives,

Josh:
I think that's a really unique advantage.

Josh:
Nobody really has the software stack that meta does and also the hardware capability

Josh:
now meta is very bad we'll talk about them we've left a lot to be desired but

Josh:
they're doing it and they have a product and they're learning manufacturing

Josh:
and they are iterating quickly.

Josh:
And if they can combine this really amazing software stack with billions of

Josh:
users and combine a compelling hardware product, which would hopefully be the

Josh:
glasses, and create this really nice ecosystem around it where you can augment

Josh:
your entire life with AI,

Josh:
that's a pretty unique position they're in because there's not many other companies

Josh:
that have that type of leverage.

Josh:
I mean, OpenAI has the most users. They don't have the hardware.

Josh:
Google has a lot of hardware and kind of users, but their products suck.

Josh:
Zuck actually has both. they just both need to be good and they both need to

Josh:
work together so if they could do that green charts ahead.

Ejaaz:
Another thing that zuck has repeatedly shown

Ejaaz:
he's good at is taking all

Ejaaz:
of this data and these users that you mentioned josh and actually

Ejaaz:
creating really fun like social features or products or network effects from

Ejaaz:
that right he created facebook he acquired instagram you have the whatsapp thing

Ejaaz:
everything is like kind of cultivating this like um ecosystem of people just

Ejaaz:
like communicating with each other as much as they can and

Ejaaz:
Probably no one better at it, right? From a hardware perspective,

Ejaaz:
again, we'll talk about it in a second.

Ejaaz:
I'm hoping that he can pull this off for AI.

Ejaaz:
He's had a few shots on goal. And in my opinion, they've missed.

Ejaaz:
He's had the meta chat bot AI assistant.

Ejaaz:
And do you remember when news broke that all user prompts and conversations

Ejaaz:
were actually made public? Really weird decision.

Ejaaz:
He released the Meta Vibes app, which is kind of like a TikTok competitive with

Ejaaz:
all AI generated video. We're going to talk about that in a second.

Ejaaz:
And that has kind of also flopped.

Ejaaz:
So I commend him for trying. And he is like the master.

Ejaaz:
He has so much history behind this. So I'm still bullish that he will be able to pull something off.

Ejaaz:
And to be honest, and I know this will seem like a cop out, Josh, it is still too early.

Ejaaz:
Like no one's created a sick AI social media layer.

Ejaaz:
Some have taken some kind of bold attempts, but we haven't figured it out.

Ejaaz:
We haven't had the final hardware form factor we haven't

Ejaaz:
had the final kind of like perspective on what this

Ejaaz:
ai kind of like system will look like i'll be just talking to chat gbd for the

Ejaaz:
rest of our lives or is there kind of something else i think once that materializes

Ejaaz:
zuck is going to come in like a cannonball and absolutely blow everyone apart

Ejaaz:
um so i'm i'm still reservedly bullish i'm just short term i'm kind of like whatever okay

Josh:
Well you mentioned hardware doesn't have a form factor yet the final form factor

Josh:
at least we do have a form factor and that is what these meta glasses so can

Josh:
we please i'm dying to talk about that.

Ejaaz:
Okay please let's talk about

Ejaaz:
i wonder why josh is excited to talk about this okay right so some context um

Ejaaz:
we released an episode about a week ago where meta announced this new ai glasses

Ejaaz:
they're called the ray-ban meta displays and the reason why this kind of like

Ejaaz:
blew everyone's minds when they announced this news was

Ejaaz:
People kind of have like never seen something like this before.

Ejaaz:
It's a pair of glasses that you kind of wear, like a normal pair of glasses,

Ejaaz:
but you see a screen projected on the right side of your glasses.

Ejaaz:
So you can see things like apps that you see on your phone.

Ejaaz:
If you're like walking somewhere, you can have a Google Maps that tells you

Ejaaz:
where to go. You can answer texts.

Ejaaz:
You can take pictures. There's a camera embedded in the frame of the glasses itself.

Ejaaz:
You've got speakers in the handles that like kind of like project audio into

Ejaaz:
your ears, like an AirPod.

Ejaaz:
It was this new device that we haven't really seen since Google Glass,

Ejaaz:
which kind of like flopped way back when. But now supposedly is the time.

Ejaaz:
And this is the first bold step that Meta has taken. And we've got a tweet here.

Ejaaz:
And for the listeners, I'm going to read it out to you from Shil Monat,

Ejaaz:
which is, you know, he's been a Meta bull for a while.

Ejaaz:
And he goes, the Ray-Ban Meta displays are fulfilling the original promise of

Ejaaz:
Google Glass. Society wasn't ready for the glass, to be honest.

Ejaaz:
Now phones are out recording stuff all the time. Meta has done a better job of it. They look normal.

Ejaaz:
$800. dollars it's mine I'm gonna buy it um and then literally two weeks later

Ejaaz:
Josh I have to share this tweet from the same guy from Shilmanot and it goes as follows

Ejaaz:
First impressions matter, and Meta really blew it with the Ray-Ban displays.

Ejaaz:
I was ready to buy them on launch, but instead of letting me order them,

Ejaaz:
they forced me to book an in-person demo at Best Buy.

Ejaaz:
It was a complete disaster. And he goes on to explain his experience where the

Ejaaz:
rep didn't know anything about the product.

Ejaaz:
They couldn't get the glasses to work. And he told him to go away and come back

Ejaaz:
later where, you know, hopefully it works.

Ejaaz:
So long story short, I think it was all talk and no walk.

Ejaaz:
And I have to spend 20 seconds, Josh, before I pass the mic to you.

Ejaaz:
I need to eat some glass and humble pie again, because I was super bullish about this, dude.

Ejaaz:
I was bullish because I'm tired of buying a new iPhone with like a better camera every year.

Ejaaz:
I want something new. I want something that would blow my mind,

Ejaaz:
like when the original iPhone came out.

Ejaaz:
And so when Meta, when Zuck specifically took this step forward,

Ejaaz:
I was applauding him because I was like, no one's been bold enough to do something like this.

Ejaaz:
And I'm excited to see this work out. and it's and it's suck it's meta

Ejaaz:
like they can't like release a shitty product

Ejaaz:
right apparently the product is kind of

Ejaaz:
shitty and it's made me bearish about buying one dude um i told you like you

Ejaaz:
know you asked me like hey have you bought these yet i'm like they don't have

Ejaaz:
an appointment for me to walk in i have to walk into a physical store to buy

Ejaaz:
this thing instead of being able to order it online which sucks to start off

Ejaaz:
with so yeah i don't i'm confused josh help me make sense of this well

Josh:
I commend you for your optimism and in a way i envy it because i think when

Josh:
it came to evaluating these, the pragmatic part of my brain one.

Josh:
And I remember saying after watching the presentation, like,

Josh:
this is not a serious presentation. This is not a serious product.

Josh:
It's disappointing that that's the reality.

Josh:
Um meta really just has no business releasing these

Josh:
products to the public yet and i respect the fact that they're.

Josh:
Doing it in public they're shipping in public they're testing in public but these

Josh:
are very much uh developer versions that i

Josh:
mean if you could even call it that because they hardly work i mean we're seeing

Josh:
on screen now another disappointed review from uh

Josh:
robert scoble on x he's been wanting them for a really long time

Josh:
i think everyone is everyone kind of has this aspirational idea

Josh:
of what the next type of hardware interface

Josh:
looks like and it's very much glasses but meta is just releasing just

Josh:
like horrendous products one of the things that i

Josh:
think they made a really big mistake with is forcing people

Josh:
to go in store to purchase but forcing them to go into

Josh:
a store that they don't control you just if you

Josh:
remember the division pro with apple you you didn't need

Josh:
to go in store but you could go in store and get a demo but you go into

Josh:
an apple store and it is a beautiful experience they pulled

Josh:
out these brand new couches for it they give you this fully walkthrough

Josh:
guide it showcases all the amazing technology and it

Josh:
actually worked to go to a best buy and have

Josh:
like the the random guy from the neighborhood who hasn't been

Josh:
trained on this who just read a little pamphlet from meta and said okay go

Josh:
show people how this works and then to to have to

Josh:
have that person demo a half-baked product with like

Josh:
pretty mediocre software and horrendous hardware quite frankly

Josh:
um it just it it doesn't work and that paired with the fact that there's supply

Josh:
constraints where even if you wanted to go to most best buys they don't even

Josh:
have them in stock um the software doesn't work the hardware doesn't work it's

Josh:
a total disappointment i think zuck should do what they've been doing with the

Josh:
software and ai models and just just don't ship mediocre stuff like.

Josh:
With open source models, they were going to ship Behemoth, which was their very

Josh:
large open source AI model.

Josh:
And it never was good enough, so they never shipped it. And I think that's fine.

Josh:
I'd rather you just keep it to yourself.

Josh:
Don't ship garbage. What they're doing is they're shipping garbage.

Josh:
It's not a good product. It doesn't work well. And it's just disappointing.

Ejaaz:
To kind of like push on the bear case, Josh, it seems kind of desperate to me.

Ejaaz:
You know they're shipping half-assed products which

Ejaaz:
um look like something an infant used back

Ejaaz:
in the 1990s i mean like look at this like um this

Ejaaz:
is someone's perspective of what they can see using google maps

Ejaaz:
on the glasses and for those of you who are just

Ejaaz:
listening to this it looks like an old school projector that

Ejaaz:
you used to have at high school back in the day where people where

Ejaaz:
the teachers would move slides i don't know whether you guys had this here in america

Ejaaz:
but growing up in england this was like literally a lamp and a

Ejaaz:
piece of glass and you kind of like see what you see what

Ejaaz:
you see this is what it looks like it looks like something like um

Ejaaz:
some hacker made um in the early 2000s it

Ejaaz:
doesn't seem or inspiring so number one like the tech just seems rushed and

Ejaaz:
desperate um another point is the point that you brought up on the episode of

Ejaaz:
a week ago josh which is i don't know if meta is playing in the right field

Ejaaz:
like do they have the hardware chops to even scale this hardware out like who

Ejaaz:
are their partners who are their suppliers.

Ejaaz:
The fact that you have to walk into a Best Buy, a store that they don't even own, is kind of tragic.

Ejaaz:
And it doesn't speak very well of their brand.

Ejaaz:
Now, when I look at the bull case of this, I'm impressed that Mark is taking

Ejaaz:
the shot. No one else has taken the shot.

Ejaaz:
No one else at the major level of a Mag 7 company has produced a new device yet.

Ejaaz:
And it's brave of Mark to be the first one to step out. And

Ejaaz:
Knowing the amount of cash reserves that Meta has, they're going to invest in

Ejaaz:
this. They're going to iterate really hard.

Ejaaz:
They've got all these new AI researchers. They're going to work hard at making

Ejaaz:
this better really quickly.

Ejaaz:
And I wouldn't be surprised if version two or version three of this actually slaps.

Ejaaz:
Number two is they're making net new hardware as well. Don't forget the motion

Ejaaz:
wristband, which they created, which is so, so cool.

Ejaaz:
Like any kind of slight gesture of your fingertips and stuff will kind of like

Ejaaz:
translate into the metaglasses that you're wearing.

Ejaaz:
And that helps you select an app or move to the next track when you're listening

Ejaaz:
to music. So there is something here. I just think it's super early and it's super rushed.

Ejaaz:
Again, this will be a matter of waiting a couple more months or maybe six months

Ejaaz:
to see whether they can deliver on a second good version.

Josh:
Yeah, so here's probably where the market is wrong in the downside,

Josh:
where I'm looking at the stock right now.

Josh:
It's up 37.4% in the last six months. It's had an amazing run. The reality is that,

Josh:
they've never shipped a great hardware product they've haven't.

Josh:
Really shipped any great software products that use ai at all um the

Josh:
meta quest is just not that good

Josh:
these new meta ray bands are even worse um

Josh:
they have no track record of shipping anything good everything they've

Josh:
shipped has been poor there's no in the

Josh:
case that they do ship good hardware there's no ecosystem for it

Josh:
so in the case that these meta ray bands were fantastic i still

Josh:
don't use any meta applications like you said i just

Josh:
like i don't use facebook i don't use whatsapp i don't use i use

Josh:
instagram sometimes um but i love my phone as

Josh:
my camera to interface with that because it's a far better camera than

Josh:
the meta ray-bans so there's no world in which i

Josh:
would even want to invest in this ecosystem in terms

Josh:
of buying hardware products even if they were excellent so

Josh:
meta has two really difficult problems to solve one is building a

Josh:
useful software ecosystem that i actually want to participate in

Josh:
and the other is building actually good hardware products they don't have either so

Josh:
the fact that meta is up 40 without releasing any good

Josh:
software uh ai or not with their

Josh:
10 trillion dollars of employees or 10 billion dollars of employees

Josh:
they just hired and they shipped like a half-baked hardware

Josh:
product it's like why is this talk up 40 i think they

Josh:
they're betting on the fact that meta will be able to convert these users

Josh:
to cash at some point but like my god they have a very long way to go and zero

Josh:
proven track record the bull case like you mentioned uh just briefly is is they

Josh:
have cool technology like the potential energy is there they have unbelievable

Josh:
talent they have this really cool technology in the wristband that can predict

Josh:
your neural uh signals and it can know what you want to tap before you tap it.

Josh:
They have the foundation and the roots to build something cool.

Josh:
They just haven't done it.

Josh:
So, hey, hopefully they do. And I think that 40% gain is probably indicative

Josh:
of people being kind of optimistic and hoping that they will.

Ejaaz:
Let's talk about Meta's bread and butter, what they're actually good at.

Ejaaz:
They're good at making social media apps, right? That's how they've made all their money.

Ejaaz:
That's why they have all their billions and billions of users, right

Ejaaz:
um unfortunately when it comes to

Ejaaz:
ai meta apps it's actually my

Ejaaz:
most bearish argument for this entire episode for

Ejaaz:
my meta investment because um i think two weeks ago they announced their first

Ejaaz:
meta ai app it's called vibes which is basically kind of like a tiktok style

Ejaaz:
app except every single video that you scroll past is ai generated and they

Ejaaz:
had this kind of like cool promo video where,

Ejaaz:
you know, they explained that it's super easy to make AI videos.

Ejaaz:
You just type in a prompt.

Ejaaz:
And if all of this is sounding familiar, it's because it sounds like Sora,

Ejaaz:
OpenAI's app, which does pretty much the same thing, except,

Ejaaz:
Josh, there's one major difference between these two apps.

Ejaaz:
One of them hit number one in the App Store and is still number one in the App

Ejaaz:
Store, whilst the other has kind of like fallen down the App Store rankings as well.

Ejaaz:
And Like I said earlier, I don't remember the last time I opened the Facebook

Ejaaz:
app. Why didn't they just create a new app?

Ejaaz:
And so the point I'm trying to make here is how has...

Ejaaz:
A company with, you know, trillions of dollars of value and billions of dollars

Ejaaz:
to spend and some of the best social media app engineers ever to kind of coalesce in one single company

Ejaaz:
flopped on their opening AI app whilst, sorry, pun intended,

Ejaaz:
I guess, OpenAI's app, Sora 2, is absolutely killing it.

Ejaaz:
Like they've let like a newbie come in and eat their lunch.

Josh:
This is the tough thing with the ecosystem is I'm not even sure how to access

Josh:
the Vibes app. Is it a standalone app? Is it built into my Facebook app?

Josh:
I don't know. I haven't used it, nor do I have any incentive to.

Josh:
Because, I mean, even though Sora came out later, well, Sora,

Josh:
I use ChatGPT. In fact, I love using ChatGPT.

Josh:
And ChatGPT is very present on my timeline too. There's a lot of people talking

Josh:
about it. There's a lot of people using it.

Josh:
I want to be engaged in that community. There's nobody on my timeline talking about Vibes.

Josh:
There's nobody talking about how much they love their AI generated video on

Josh:
the Vibes app. I haven't even seen any screenshots or videos of it,

Josh:
which is why I'm not even sure if it's live yet.

Josh:
There's just this like huge disconnect between the velocity of,

Josh:
I guess, social acceptance of OpenAI's products versus Meta's products.

Josh:
And while they were both mostly the same, it would appear at least from the announcements.

Josh:
I very obviously just prefer OpenAI because that's where I am.

Josh:
They have my data. That's where my friends are. That's where I can scan in my face and make a cameo.

Josh:
And I think that's the most viral element of the Sora app versus Facebook's

Josh:
vibes, which just it's very sterile. It's very generic.

Josh:
So I think like Meta very clearly lost. This was the one on one they lost,

Josh:
mostly because of the social virality brought to the application through Sora's

Josh:
Cameo feature, where you can actually insert yourself into the AI content.

Josh:
And it's, again, it's just, it's a disappointment. You're sealing the announcement

Josh:
from Alexander Wang. They spent billions of dollars on him.

Josh:
He's in charge of this whole AI infrastructure plan. And they're just releasing

Josh:
something that, again, it's kind of like half baked.

Josh:
I'm not even sure how to use it. No one's talking about using it.

Josh:
There's nothing compelling about that product.

Josh:
So that to me is a swing and a total miss.

Ejaaz:
I actually think it's the biggest swing. I think this is the bullet in the chamber,

Ejaaz:
Josh, because of a few things.

Ejaaz:
Okay, so number one, I'm going to pull up this tweet from Alexander Wang,

Ejaaz:
who talks about this MetaVibes app.

Ejaaz:
And he says, for this early version, we're partnering with MidJourney and Black Forest Labs.

Ejaaz:
Okay, what this instantly tells me is this isn't fully thought out.

Ejaaz:
They've rushed this product once again, just to get something out there,

Ejaaz:
probably because they heard that OpenAI was going to release their own social media app.

Ejaaz:
Number two, this is kind of an emperor has no clothes situation, in my opinion,

Ejaaz:
because what it tells me is you need a really good AI model at your core product

Ejaaz:
offering in order to build any cool app on top of it.

Ejaaz:
So either you use someone else's AI model or you build it yourself.

Ejaaz:
And Meta has tried building their own model

Ejaaz:
in their llama models they open sourced it and the fact is

Ejaaz:
does anyone talk about it anymore i haven't seen it

Ejaaz:
on the timeline i haven't seen anyone of my friends uh software engineers using

Ejaaz:
it at all um so that kind of flopped and everyone's kind of being quiet about

Ejaaz:
it and it's translating into their apps now they don't have a good enough model

Ejaaz:
to create good enough ai video to compete with the open ais and the googles

Ejaaz:
of this world they have google has vo3 they're putting it in YouTube Shorts.

Ejaaz:
So Meta has the distribution, they have the users, but in my opinion,

Ejaaz:
they don't have the foundational key component.

Ejaaz:
And this, in particular, the Meta Vibes app, kind of revealed that the most to me.

Ejaaz:
It's where I'm most bearish on it, on Meta as an investment at this moment.

Ejaaz:
Now, I need to force myself as an investor to look at the bull case, right?

Ejaaz:
Because either Meta stock's going to zero, because I don't care what anyone says, AI is the future.

Ejaaz:
If your company doesn't execute on it effectively, you are going to zero.

Ejaaz:
So is meta going to zero or are they going to swing things around?

Ejaaz:
One thing that I've seen suck

Ejaaz:
Um perform really well at josh is not

Ejaaz:
only creating things from zero to one but taking things

Ejaaz:
from one to 100 right we saw

Ejaaz:
it when snapchat came out right and zuck was like uh

Ejaaz:
let's try and buy them and they were like no and they

Ejaaz:
were like okay cool we're gonna just do our own thing we're gonna create snapchat

Ejaaz:
competitor and here we go and you had instagram stories he

Ejaaz:
did the same thing with tiktok they created reels

Ejaaz:
and now all the famous soar videos that

Ejaaz:
are released in the last week are getting shared on ig reels and they have millions

Ejaaz:
and millions of views right so i'm still confident that zuck will kind of like

Ejaaz:
take this hit on the chest and be like okay cool well whatever the good version

Ejaaz:
of this ends up becoming we're going to build a better app and maybe again that is meta vibes 2.0

Josh:
Yeah it's getting harder to copy because like you mentioned having that brain

Josh:
at the core of your infrastructure matters and i think a big difference that

Josh:
we see between open AI and Meta is that OpenAI builds that brain first,

Josh:
and then they figure out a vessel to wrap it up with a product and ship that

Josh:
as a way of distributing the brain.

Josh:
That's what we saw with Sora. They developed this amazing video generation software.

Josh:
They packaged it up into a product. They shipped it. They created this amazing LLM.

Josh:
They packaged it up into ChatGPT and they shipped it. So they developed the

Josh:
technology prior to developing the product.

Josh:
What Meta is doing is they're starting by developing the product,

Josh:
but they don't quite have the technology to place inside of the product,

Josh:
nor is the product particularly good.

Josh:
So, OpenAI, in this case, they beat Meta on product because they had the Cameo

Josh:
feature, which was amazing for virality. Meta.

Josh:
Didn't have anything uniquely compelling about it and

Josh:
it's clear from this that they had to outsource the brain the thinking

Josh:
to mid-journey and black forest labs so they only

Josh:
had to make the product they failed at making the product and they tried

Josh:
to make the brain but failed and had to outsource it so from from

Josh:
my perspective they just they're getting just like crushed at all

Josh:
fronts and i think it's increasingly difficult

Josh:
to see a company like snapchat and crush it because

Josh:
you can't just copy a code base and run on a cpu you

Josh:
need a gigantic gpu cluster in order to

Josh:
to copy these with the actual level of

Josh:
vertical integration that we see from a company like open ai so in

Josh:
a world in which zuck's competitive advantage was just crushing his competitors

Josh:
by copying them and making it slightly better it's getting increasingly challenging

Josh:
to do um so that would be my concern as i'm just kind of observing the the meta

Josh:
stock is like hmm okay you haven't shipped a great product you haven't shipped

Josh:
any good ai you haven't shipped any good hardware like when is this going to happen?

Josh:
That's my big concern. It's like, when are you actually able to do this?

Ejaaz:
Well, let's take a peek under the meta head, shall we?

Ejaaz:
Let's actually look at the brain that they have right now, which is their AI model, LLAMA, right?

Ejaaz:
The reason why we haven't heard from the LLAMA models for like the last,

Ejaaz:
I think, three or four months, which in the AI world is a heck of a long time,

Ejaaz:
is because they just suck, Josh.

Ejaaz:
Like, I'm going to pull up this this uh this

Ejaaz:
um bar graph which basically compares um

Ejaaz:
maverick 4 which is that you know their best thinking

Ejaaz:
reasoning model and it sucks compared to an old gpt4 model to gemina to gemma

Ejaaz:
sorry and through claude 3.7 sonnet and if you're wondering hey ijaz why are

Ejaaz:
you talking about old gpt models gemma models from google and um claude models

Ejaaz:
Because Lama hasn't released anything that is as good as the latest models from

Ejaaz:
those same companies, which tells me that Zuck and Meta are in a bit of a rut

Ejaaz:
when it comes to forming that brain that you're talking about, Josh.

Ejaaz:
Their AI model isn't good enough. And you mentioned that they were secretly

Ejaaz:
working on a much, much bigger model, right, called Behemoth.

Ejaaz:
And they didn't end up releasing it, supposedly, because it just wasn't good

Ejaaz:
enough. And then coincidentally, they went on this hiring spree,

Ejaaz:
spending $30 billion to hire, I don't know, whatever.

Ejaaz:
50 people or however many people they hired. And that was by already having

Ejaaz:
an AI team, which has now gone quiet.

Ejaaz:
Who was the guy that led that old AI team at Meta? Do you remember his name, Josh?

Josh:
Oh, I am forgetting. I know what his face looks like.

Ejaaz:
I'm forgetting his name. But all I remember is he would argue against all the

Ejaaz:
top AI researchers at competitive companies who were saying,

Ejaaz:
no, you have to be aggressive.

Ejaaz:
We need to spend a lot money in this.

Ejaaz:
And he would just be like, nah, like there's a different architecture we can use.

Ejaaz:
I haven't discovered it yet, but I'm almost confident that the way that you

Ejaaz:
guys are doing it isn't the right way.

Josh:
That's Jan, Jan LeCun.

Ejaaz:
Yeah, Jan LeCun, exactly. And fast forward six months and you've had people

Ejaaz:
like Elon Musk, who was late to the race, much later than, you know,

Ejaaz:
Meta or AI when they were kind of already focused and created this team with Jan LeCun heading it,

Ejaaz:
race ahead of them and beat them and spend more time on compute and more money on compute.

Ejaaz:
So I guess the point that I'm making at is they've dropped the ball creating the brain.

Ejaaz:
Now, that's my bear case. The bull case is they've hired away all the smartest

Ejaaz:
AI researchers from the competitors that give them the best shot at building

Ejaaz:
the best brain in the future.

Ejaaz:
And my bull case tells me that they're not gonna create it in a few months.

Ejaaz:
They're probably gonna create it in six months because remember, they're

Ejaaz:
not trying to create Llama 5 they're

Ejaaz:
trying to leapfrog all the existing models that exist today that's going to

Ejaaz:
take a bit of time that's going to take a ton of money and he's spending the

Ejaaz:
money and hopefully he's spending that money on compute so my guess is the next

Ejaaz:
model that Llama that meta releases is going to be killer it's probably not

Ejaaz:
going to be open source but it's going to be killer

Josh:
Well, we'll know it's better if it's not open source, because open source,

Josh:
as we've seen from China, is very much a signal of you being at a disadvantage.

Josh:
So if Meta comes out, they release a closed source model, it starts crushing benchmarks.

Josh:
That's a good signal to look out for.

Josh:
But this, I mean, the episode, this leaves me with a lot to be desired.

Ejaaz:
I'm like, man, Meta,

Josh:
There is a bull case. And the bull case is if Meta can execute,

Josh:
they are better positioned than basically anyone else. They have the hardware

Josh:
manufacturing capability. They have the software capability.

Josh:
They have more users than anyone in the world.

Josh:
If they are able to hit a home run, it is going to be a grand slam.

Josh:
That feels like a low probability. The reality is they haven't shipped any great software.

Josh:
They haven't shipped any great hardware. They have never created an original

Josh:
product that is compelling, at least in my personal opinion.

Josh:
And they have spent tons of billions of dollars on talent that seemingly isn't

Josh:
making any progress fast.

Ejaaz:
Okay, so what you're looking at here is a

Ejaaz:
graphic or a video showing how big

Ejaaz:
the data center that meta is building currently

Ejaaz:
will look like it is the size of manhattan

Ejaaz:
pretty much or like the good stretch of the main island so it's

Ejaaz:
huge um and this is set to produce i believe it's five gigawatts of uh compute

Ejaaz:
which is don't get me wrong a huge amount but if i were to compare it to colossus

Ejaaz:
2 which is what elon musk's company xai is building right now to power their next Frontier model.

Ejaaz:
I think that's going to be between five to 10 gigawatts.

Ejaaz:
And, you know, Elon's already thinking about what the next data center is going to look like.

Ejaaz:
And he's delivering on that really, really quickly, by the way.

Ejaaz:
Like, I think I read a statistic, Josh, where in the first five months of building Colossus 2,

Ejaaz:
he had already delivered 500 megawatts of power, which is just crazy and unforeseen,

Ejaaz:
because usually it takes like a couple of years to even set the foundations

Ejaaz:
before you can start powering this up.

Ejaaz:
And, you know, Jensen has said many times that Elon is the best at scaling these things.

Ejaaz:
Zuck, I haven't heard of Hyperion, their data center, since they announced it.

Ejaaz:
Like, they had an extended timeline of going, and they gave a vague post about

Ejaaz:
this, Josh, 2030 and beyond.

Ejaaz:
That's when we're going to be kind of done with it. With the first gigawatt

Ejaaz:
sometime in the late 2020s.

Ejaaz:
And I'm like, dude, you need to ship this now.

Josh:
Yeah, I can say this with 100% levels of conviction that if...

Josh:
Meta has to compete directly with other companies uh with no edge and they have

Josh:
to compete on the front of building data infrastructures they are going to get

Josh:
absolutely destroyed um there's just no way uh xai is moving at an incredibly

Josh:
fast velocity open ai has partnered with the entire planet to help them build these data centers 25.

Ejaaz:
Gigawatts at this point

Josh:
Yeah 25 gigawatts they're getting money from saudi arabia they're getting money

Josh:
from broadcom they're getting they have custom chip fabs they're vertical integrating

Josh:
they are going to absolutely slaughter meta on this front

Josh:
so if meta is competing one-on-one on this and they're trying to win here

Josh:
it's just not possible um they have to win elsewhere they

Josh:
have to win on the software stack they have to win on the hardware integration um because

Josh:
this is cute but like okay go build it go build your five gigawatts i love that

Josh:
you are aiming for that go go build the damn thing they're not making progress

Josh:
so yeah it's disappointing on the data center front which is which is hard because

Josh:
it is so critical and they have the the wherewithal to build it they just clearly

Josh:
are not building it and just can't really compete at these levels can i.

Ejaaz:
Give you my low iq bold thesis given that we've spoken about everything meta ai right now why i'm

Josh:
Normally this is what moves the lower iq the better so what do we got okay okay.

Ejaaz:
I have two simple arguments for why i think meta is a good buy right now number

Ejaaz:
one i've never seen mark so aggressive as he is today.

Ejaaz:
And he's putting his money where his mouth is literally.

Ejaaz:
He's committing to spending hundreds of billions of dollars,

Ejaaz:
probably hitting a trillion dollars over the next five years to win at this game.

Ejaaz:
So that gives him a high probability of winning.

Ejaaz:
It may not look like he's winning in the first couple of months,

Ejaaz:
but who cares on the grand scale of things if this thing is going to be a life world changing thing.

Ejaaz:
Okay, number one is his aggressiveness. Makes me

Ejaaz:
Meta is kind of too large to fail. And I might end up eating my words a year or two years from now,

Ejaaz:
but they have so much money that is coming in from other sectors of their platform

Ejaaz:
that isn't AI related that they can use to keep funding this thing until they

Ejaaz:
hit it. So will they hit it the first couple of times?

Ejaaz:
Maybe not. It might suck, but I bet you they're going to hit it on the second,

Ejaaz:
third, or maybe even fourth time.

Ejaaz:
Those are my two reasons why I'm bullish on Meta.

Josh:
Okay, so we have a fun surprise to give to the listeners. But before we do,

Josh:
um i just i need to ask you the final question which

Josh:
is yes as a meta stock holder are you planning to continue

Josh:
holding meta stock uh yes i

Josh:
am okay nice i i feel like that that's

Josh:
interesting because to me i concluding this

Josh:
episode i'm i'm bullish on meta stock in the sense that i believe

Josh:
the number will go up on a relative basis compared to

Josh:
other opportunities i am very bearish to invest

Josh:
in meta at a 1.8 trillion

Josh:
dollar valuation when a company like tesla is

Josh:
at 1.3 uh it just feels like a misallocation

Josh:
in terms of potential returns risk adjusted returns

Josh:
perhaps but i do believe the case that meta will absolutely go up because ai

Josh:
is growing so fast the gdp of the planet is growing so fast and they will most

Josh:
certainly capture some percentage of that just by being just by their nature

Josh:
like you said just being such a colossal company they stand to benefit from the up wings of AI.

Josh:
So I guess at the end of the day, we're both probably bullish on meta.

Josh:
We both believe the company will go up. Regardless of where their downfalls

Josh:
are, the stock price, if we're just talking on a basis of that,

Josh:
seems like it's going higher.

Josh:
But let's get to the little gift that we have, EJ. You have sourced us some

Josh:
magical codes, right? For the actual good product.

Ejaaz:
Yes, we have. Okay, so if you remember, my most bearish take on this episode

Ejaaz:
was like the Meta Vibes app sucks, but their competitor, OpenAI Sora, is absolutely awesome.

Ejaaz:
And I'm loving it. And I'm still creating videos on their app and it is like

Ejaaz:
AI generated TikTok, but Josh, I'm sorry, it makes me laugh.

Ejaaz:
And I love making cameos with my friends. and I have seen so many Sora videos

Ejaaz:
go viral on TikTok and Instagram Reels that it's just too good to use.

Ejaaz:
But there's an issue with this. Not everyone has access to it.

Ejaaz:
They're keeping it super locked down and you need an invite code.

Ejaaz:
So we went to our friends at OpenAI and we said, hey, like, you know,

Ejaaz:
we have a bunch of really awesome listeners who listen to this episode right

Ejaaz:
till the end, like you guys are right now and they deserve something special.

Ejaaz:
And they were like, you know what?

Ejaaz:
We'll give you 500 Sora codes. and that's what we have.

Ejaaz:
And if you guys want a Sora code, we just have a few very humble requests.

Ejaaz:
If you enjoy our episodes, if you enjoy listening to The Limitless Show,

Ejaaz:
please like, please subscribe to the videos and to the episodes that you listen to.

Ejaaz:
But most importantly, give us a five-star rating on whatever listening platform

Ejaaz:
that you listen to this on.

Ejaaz:
Or if you're on YouTube, give us a thumbs up, subscribe to us.

Ejaaz:
And if you DM Josh and I or The Limitless account, proof of this, you can reach us out.

Ejaaz:
On x or on our personal profiles or whatever that might be or if you comment

Ejaaz:
and tell us that you have done this we will send you a code josh is that fair

Josh:
I think that seems fair. Yeah. So the intention is like, okay,

Josh:
we're starting, we have a fairly small show.

Josh:
We're trying to grow a small show. And what's really helpful in growing a small

Josh:
show is when people who enjoy it, they signal to the platforms that amplify

Josh:
our shows that they enjoy it.

Josh:
So therefore the platforms will want to amplify our stuff more.

Josh:
So when you go on a platform like Spotify and you rate it five stars,

Josh:
it really helps us kind of elevate the rankings and get more distribution for

Josh:
more people to hear the show.

Josh:
So as a thank you for the service, I said, it doesn't even have to be five stars.

Josh:
If you think we're four stars, fine, I'll take it. But if you have a five star,

Josh:
that's really appreciated.

Josh:
But if you can take the time to do that, it is so very much appreciated.

Josh:
Ejaz was like very gracious in getting us these codes from the OpenAI team.

Josh:
And it's like a fun little exchange that we could do. So we have plenty.

Josh:
We'd love to give them out. We'd love to let you try them.

Josh:
As always, thank you for making it to the end. This was a little longer than usual.

Josh:
So thanks for sticking with us and just being here for the journey.

Josh:
We are on a one-way trajectory up and to the right. and it is thanks to all

Josh:
of you supporting us through the way so tell.

Ejaaz:
Us if you're gonna buy or sell meta stock please

Josh:
Yeah and are you bullish or bearish on meta stocks i'd love.

Ejaaz:
To know yeah give me some crazy crazy crazy like

Josh:
Maybe i'm just delusional just living in this bubble but yeah that's that's

Josh:
been the meta episode thank you all so much for watching for supporting for

Josh:
all the things and uh yeah we'll see you on sora if anything yeah and also the

Josh:
next episode all right peace guys.